Staff Reporters
Aug 22, 2019

Stalling of China's mobility sector calls for big innovation

TOP OF THE CHARTS: Better services, higher prices and greater platform innovation are needed to see profitability increase for ride-hailing and other services, according to Bain.

Stalling of China's mobility sector calls for big innovation

Major innovation and better operations are required to turn around the major slowing of China's mobilty industry, according to a new report from Bain. 

Growth in ride hailing, bike sharing, B2C car sharing and other services has plummeted in recent years, thanks to a combination of dwindling consumer trust and tighter regulations on brands such as Didi, Bain found in its report 'The Bumpy Road to Profits in Developing Asia’s Mobility Industry'.

Originally projections had China's mobility sector reaching US$72 billion by 2020, but Bain has now downgraded this to US$60 billion by 2021. China's number of monthly active ride-hailers fell 5% in 2018, with investments in mobility dropping 48% last year overall. 

Bain points to the rapes and murders of two Didi passengers using its Hitch carpool service as a key turning point, as the Chinese government suspended the service and introduced tougher operating regulations, while consumer trust sank. The rise and dramatic fall of China's bike sharing sector is well documented, with several brands closing down due to significant cash flow and profitability issues. 

To combat this declining trend, Bain calls for four significant changes:

  • Mobility brands must offer best-in-class services to regain trust
  • Remain geographically focused by not expanding too far into new markets
  • Explore 'adjacency expansion' by offering new, innovative services on their platforms
  • Continue to innovate  

 

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